CFPB Lays Out Implementation Plan for New Mortgage Rules

On February 13, 2013, the Consumer Finance Protection Bureau published their intent to assist in implementation for all the new mortgage rules that have been published.

They stated that they will:

  • Coordinate with other agencies: The CFPB is coordinating with other federal government regulators that also conduct examinations of mortgage companies to ensure all regulators have a shared understanding of the CFPB’s new rules. This will help promote a consistent regulatory experience for industry.
  •  Publish plain-language guides: The CFPB will publish easy-to-understand summaries of the regulations in both written and video form. The guides, available in the spring, will be particularly helpful to smaller businesses with limited staff for compliance.
  •  Publish updates to the official interpretations: Over the next year, the CFPB plans to issue updates of the “official interpretations,” which provide guidance on how to comply with the rules. These updates will allow the CFPB to address important questions raised by industry, consumer groups, or other agencies. Priority for these updates will be given to issues that are important to a large number of providers or consumers, and that critically affect mortgage companies’ implementation decisions. The Bureau expects to issue the first one in the spring and issue additional updates, as needed.
  •  Publish readiness guides: These guides, available this summer, will help mortgage originators and servicers prepare to comply with the new rules by giving them helpful check-lists, such as suggesting that implementation plans include items like revising policies and procedures and finalizing training plans for staff. More in-depth examination procedures are expected to be published later this year by the Federal Financial Institutions Examination Council. Industry members will be able to use these examination procedures to conduct self-assessments and internal reviews of their readiness and compliance.
  •  Educate consumers: As the January 2014 date approaches, the CFPB will give consumers information about their new protections under these rules through a broad-reaching consumer education campaign.

More information about the CFPB’s new mortgage rules can be found at: www.consumerfinance.gov/regulations

Any inquiries about the meaning or intent of the regulations may be directed to: CFPB_reginquiries@cfpb.gov or 202-435-7700.

ECOA Rule on Providing Appraisals Final Rule Released by CFPB

The Consumer Financial Protection Bureau (Bureau) is issued the final rule implementing an amendment to the Equal Credit Opportunity Act (ECOA) regarding furnishing copies of appraisals and other written valuations to applicants for first lien loans secured by a dwelling on January 18, 2013. The rule will become effective on January 18, 2014.

The rule amends the appraisals provision of Regulation B, which implements ECOA. The amended provision covers only applications for credit to be secured by a first lien on a dwelling.

The new rule:

  • Requires creditors to notify applicants within three business days of receiving an application of their right to receive a copy of appraisals developed.
  •  Requires creditors to provide applicants a copy of each appraisal and other written valuation promptly upon their completion or three business days before consummation (for closed-end credit) or account opening (for open-end credit), whichever is earlier.
  • Permits applicants to waive the timing requirement for providing these copies. However, applicants who waive the timing requirement must be given a copy of all appraisals and other written valuations at or prior to consummation or account opening, or if the transaction is not consummated or the account is not opened, no later than 30 days after the creditor determines the transaction will not be consummated or the account will not be opened.
  • Prohibits creditors from charging for the copy of appraisals and other written valuations, but permits creditors to charge applicants reasonable fees for the cost of the appraisals or other written valuation unless applicable law provides otherwise.

The disclosure requirements of this rule overlap with a rule on appraisals for higher-priced mortgage loans the Bureau is issuing jointly with several other agencies today. That rule implements an amendment that the Dodd-Frank Act made to TILA, which also requires creditors to provide free copies of appraisals in transactions covered by the rule and to provide a disclosure at application. The same appraisal notice can be used to satisfy both this rule and the TILA rule, in transactions where both rules apply.

CFPB Releases Proposed Servicing Standards

On August 9, 2012, CFPB Director Cordray held a media briefing announcing the impending release of proposed national servicing standards to protect consumers especially those undergoing challenges in making their monthly payments on mortgages.

“The major failures in this industry demonstrate that all servicers need to meet basic standards of good customer service,” CFPB Director Richard Cordray said in a call with reporters.

He said the proposal reflects “two basic, common-sense standards — no surprises and no runarounds.”

The comment period is 60 days from publication of the proposed rule in the Federal Register.

The proposed rules cover nine major topics and implement Dodd-Frank Act provisions that relate to mortgage servicing.

 

  • Periodic billing statements (TILA proposal) -Servicers would be required to provide clear billing statements including information on the loan, amount due, and application of past payments.
  • Adjustable-rate mortgage interest-rate adjustment notices (TILA proposal) – Servicers would be required to provide consumers with a new notice 6 to 7 months before the first rate adjustment, as well as earlier and improved notices before rate adjustments causing an increase in a consumer’s mortgage payments.
  • Prompt payment crediting and payoff payments (TILA proposal) – Payments must be applied as of the day they are received, and the handling of partial payments is clarified.
  • Force-placed insurance (RESPA proposal) – Servicers can only charge borrowers for buying insurance on the property when they have a reasonable basis to believe that the borrowers have let their own insurance lapse and have given borrowers two notices estimating the cost of the “force-placed insurance.”
  • Error resolution and information requests (RESPA proposal) -Mistakes happen, but they need to get fixed. Servicers must address borrower concerns about possible errors within certain timeframes and provide the information they request.
  • Information management policies and procedures (RESPA proposal) – Servicers must have reasonable policies to ensure that when borrowers provide documents and information the servicers can find and use them.
  • Early intervention with delinquent borrowers (RESPA proposal) –  Servicers must work with delinquent borrowers with early intervention and information about options available.
  • Continuity of contact with delinquent borrowers (RESPA proposal) – Servicers will insure delinquent borrowers will be able to contact the right people to get information and take steps to avoid foreclosure.
  • Loss mitigation procedures (RESPA proposal) – Servicers would be required to appropriately review borrower applications for loan modifications or other options to avoid foreclosure.

Mortgage servicing companies would be required to provide clear monthly billing statements, warn borrowers before interest rate hikes and actively help them avoid foreclosure. The rules also require companies to credit people’s payments promptly, quickly correct errors and keep better internal records.

The CFPB plans to finalize the rules by January 2013. Comments may be submitted at www.regulations.gov. In addition, the Cornell University e-Rulemaking Initiative (CeRI) and the CFPB are working together to create an online environment for people and groups to learn about, discuss, and react to the proposed mortgage servicing rules, it will be located at www.regulationroom.org

Summary of Proposed Mortgage Servicing Rules

2012 Truth in Lending Act (Regulation Z) Mortgage Servicing Proposal

2012 Real Estate Settlement Procedures Act (Regulation X) Mortgage Servicing Proposal

CFPB Servicing Fact Sheet

SBREFA Report on Servicing

CFPB Forms Testing Report

HOEPA Proposed Changes to Regulation Z and Regulation X

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amends the Truth in Lending Act by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protection Act of 1994 (HOEPA), by revising and expanding the triggers for coverage under HOEPA, and by imposing additional restrictions on HOEPA mortgage loans, including a pre-loan counseling requirement.

The Dodd-Frank Act also amends the Truth in Lending Act and the Real Estate Settlement Procedures Act by imposing certain other requirements related to homeownership counseling. The Bureau is proposing to amend Regulation Z (Truth in Lending) and Regulation X (Real Estate Settlement Procedures Act) to implement the Dodd-Frank Act’s amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act.

DATES: Comments must be received on or before September 7, 2012

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2012-0029 or RIN 3170-AA12, by any of the following methods:

Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

Mail: Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1700 G Street, N.W., Washington, D.C. 20552.

Hand Delivery/Courier in Lieu of Mail: Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1700 G Street, N.W., Washington, D.C. 20552.

All submissions must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. In general, all comments received will be posted without change to http://www.regulations.gov.

High Cost Amendments to Reg x- Reg Z

2012 Loan Limits

The Federal Housing Finance Agency (FHFA) has issued the loan limits that will apply to conventional loans to be acquired by Fannie Mae and Freddie Mac in 2012. These maximum conforming loan limits will remain at existing levels, except in Fairfield County, Connecticut, where the limits will increase. The first mortgage loan limits are defined in terms of general loan limits and high-cost area loan limits.

First Mortgage Loan Limits

The following chart contains the general loan limits for 2012:

Units

General Loan Limits

Contiguous States,     
District of Columbia, and Puerto Rico

Alaska, Guam, Hawaii, and the U.S. Virgin Islands

One

$417,000

$625,500

Two

$533,850

$800,775

Three

$645,300

$967,950

Four

$801,950

$1,202,925

 

The high-cost area loan limits are established for each county (or equivalent) and are published on eFannieMae.com and on FHFA’s Web site. The maximum limits for 2012 are:

Units

High-Cost Area Loan Limits

Contiguous States,     
District of Columbia, and Puerto Rico

Alaska, Guam, Hawaii, and the U.S. Virgin Islands

One

$625,500

$938,250

Two

$800,775

$1,201,150

Three

$967,950

$1,451,925

Four

$1,202,925

$1,804,375

These limits were determined   under the provisions of the Housing and Economic Recovery Act of 2008.

 

High-cost area loan limits are derived from median home prices estimated by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD). FHA will permit a 30-day appeals period during which requests for individual area median home price increases will be evaluated. vacation planner domain names . FHFA will issue a subsequent announcement if any individual high-cost area loan limit is increased as a result of the appeals process.

Second Mortgage Loan Limits

For second mortgage loans, the loan limit for 2012 is $208,500 (or $312,750 in Alaska, Guam, Hawaii, and the Virgin Islands). Furthermore, the sum of the original loan amounts of the first and second mortgage loans may not exceed the applicable loan limit for first mortgage loans based on the location and the number of units of the subject property.